The Federal Reserve Holds Off On Interest Rate Hike

The Federal Reserve announced on Wednesday that it is leaving its benchmark interest rate unchanged, a move designed to encourage recently robust job creation to continue.

The decision by the Federal Open Market Committee, the central bank panel charged with adjusting its influential federal funds rate, means Americans will likely avoid paying higher interest rates on their mortgages, car payments and other loans.

The influential federal funds rate, or the interest rate banks charge one another for overnight lending, will remain at a target range of 0.25 to 0.5 percent. The Fed raises the interest rate to head off rising price inflation by slowing the pace of job market growth.

“With appropriate monetary policy, we continue to expect moderate economic growth, further labor market improvement and a return of inflation to our 2 percent objective in 2-3 years,” Federal Reserve Chairwoman Janet Yellen said at a press conference announcing the decision. “However, global economic and financial developments continue to pose risks.”

The last time the Fed raised the federal funds rate was in December, the first time since the 2008 financial crisis. It is a testament to the tenuous state of the economic recovery eight years later that the Fed is still exercising so much caution.

Wednesday's decision was widely expected, in light of modestly gloomier global economic conditions and lackluster U.S. wage growth.

As investors have become more anxious, credit has become harder to obtain in the United States. The tighter lending had the same depressing effect on the economy as a 1 percentage point Fed rate hike, according to economists at Goldman Sachs.

The dollar also continues to rise relative to foreign currencies, making U.S. exports less competitive.

And while the U.S. economy continues to produce jobs consistently, wages declined in February.

Yellen acknowledged that the robust job market had yet to produce significant wage growth.

“I must say, I do see broad-based improvement in the labor market and I’m somewhat surprised we’re not seeing more of a pickup in wage growth,” she said. “It is one of the factors that suggests to me there is continued slack in the labor market.”

Inflation is finally approaching the Fed’s 2 percent target, however, indicating that the Fed may soon have the evidence it needs to raise the interest rate when the FOMC meets again in April.

The price of consumer goods, excluding food and energy, rose 1.7 percent growth in the 12 months ending in January, according to the price index favored by the Fed.

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Federal Reserve Chair Janet Yellen speaking at a press conference on Wednesday after the Fed announced that the benchmark interest rate will not rise.

Indeed, all ten sitting members of the FOMC, as well as the seven regional Federal Reserve bank presidents not on the committee, believe economic conditions will allow for an interest rate hike before the year's end.

The 17 officials' predictions, however, released in a survey known as the "dot plot," show greater pessimism about the economy than when the Fed last met. The officials' median projection is that the Fed will raise the interest rate to 0.9 percent by the end of 2016, compared with the December 2015 median projection of 1.4 percent.

One sitting FOMC member, Kansas City Federal Reserve Bank President Esther George, voted against the decision, favoring a 0.25 percent rate hike at this time.

In a week dominated by presidential election and Supreme Court nomination news, the Fed’s announcement stands to draw only moderate attention.

But the lack of a rate hike, which gives the economy more leeway to grow unencumbered, is probably good news for Hillary Clinton’s presidential candidacy. The putative Democratic front-runner is poised to benefit from a positive economic outlook, since voters are more likely to return an incumbent party to power if the economy is doing well.

Public opinion polls and the populist electoral mood in both political parties suggest that voters still do not feel their economic fortunes palpably improving, despite a record streak of job growth. Many analysts argue that the lack of a political upside to the high-performing economy is because Americans are, on average, not making much more money.

That is why progressive economists and activist groups have been calling on the Fed to allow unemployment to dip even lower, so employers will begin raising wages more significantly in order to compete for workers.

The progressive Fed Up coalition, comprising groups representing low-income workers and communities of color, is calling on the Fed not to raise the benchmark interest rate at all in 2016.

“The Fed needs to connect the dots with reality: involuntary part-time work is still almost double pre-recession levels, labor force participation rates are still low, Black unemployment is more than double white unemployment and Latino unemployment and underemployment is still at crisis levels, and wage growth is almost non-existent,” Dushaw Hockett, executive director of SPACES, a Washington, D.C. community group that is part of the Fed Up coalition, said in a statement.

“Rather than slowing down progress, the Fed should do all it can to facilitate growth in 2016 and beyond.”

We Should Have Been Listening To Erin Brockovich All Along

It took 16 years for us to start actually listening to Erin Brockovich again.

The consumer advocate and mother of three, whose historic class-action suit against an energy company that poisoned a California town’s water became a Hollywood movie, hadn’t stopped fighting for clean water. And today -- amid ballooning public water crises in Flint, Michigan; Jackson, Mississippi; and Hoosick Falls, New York -- her warnings about water contamination seem more urgent than ever.

“For years, we’ve seen this water crisis coming,” Brockovich, who was played by Julia Roberts in an eponymous 2000 biopic, told The Huffington Post by phone on Thursday. “It’s like an earthquake -- you prepare for it, but when it hits you’re still like, ‘oh my gosh.’”

Now, Brockovich expects more places to join the list. She said “millions of people in countless communities” could be affected by contaminated water supplies across the country.

“It’s cropping up everywhere now,” she said. “It used to be, historically, we’d see it in places that were more remote -- families looking to move away from cities, who were on well water -- we’re now seeing this pop up in municipalities, in rich or poor or rural or in the city.”

Lead contamination has emerged as the most popular water issue at the moment, as images of taps in Flint spewing foul-colored fluids appear on cable news channels almost daily. And new cases of lead contamination are popping up all over the country. Water authorities in Detroit, Philadelphia and the state of Rhode Island have distorted lead tests by using methods deemed misleading by the Environmental Protection Agency, according to an investigative report published in January by The Guardian.

But neglectful government officials, who left pipes to corrode, aren’t the only ones to blame.

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Flint, Michigan, where corroded pipes led to toxic levels of lead in the water, has become the epicenter of the nation's water crisis.

The case of Hoosick Falls, a quaint mill town 35 miles northeast of Albany, hits close to home for Brockovich. There, industrial giant Saint-Gobain Performance Plastics, whose two plants in the town of roughly 3,500 serve as its chief employers, allegedly poisoned the groundwater with perfluorooctanoic acid, or PFOA. The chemical is an ingredient in polytetrafluoroethylene, a white powdery substance better known by its brand name, Teflon.  PFOA is linked to thyroid disease, kidney cancer and testicular cancer. Last month, a New York law firm filed a federal class-action lawsuit on behalf of four plaintiffs from the affected area against Saint-Gobain and Honeywell International, the chemical behemoth that previously owned the plants.

Last Tuesday, Hoosick Falls officials told residents at a packed village board meeting that a temporary filtration system was up and running and that they could soon begin flushing out pipes and pools to replenish them with filtered water. But PFOA, pronounced puh-FOH-uh by those that have to deal with it regularly, is bioresistant, meaning it does not degrade easily in nature. So it’ll be in the ground, albeit filtered out of the water, for a long time to come.

On Sunday, New York Gov. Andrew Cuomo (D) paid a brief, surprise visit to Hoosick Falls to announce that the municipal water supply had been cleared of PFOA.

Still, the governor -- who was accused of ignoring the problem until fury over Flint turned into a political quagmire for Michigan Gov. Rick Snyder (R) -- said that hundreds of community water supplies across New York may be contaminated with varying degrees of toxins. But he refused to set a statewide standard for acceptable levels of PFOA in water, despite a recent move by Vermont to cap the chemical at 20 parts per trillion.

“Why don’t you pick the lowest number possible?” Cuomo said, arguing instead for a federal standard set by the EPA. “Because then you could have hundreds of communities installing very expensive filtration systems that don’t need it.”

The issue is already spreading. Neighboring communities in Merrimack, New Hampshire, and North Bennington, Vermont, have reported PFOA contamination in their water supplies, too.

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Brockovich expects more contaminations like the one in Hoosick Falls, New York, a quaint mill town near Albany, where an ingredient used to make Teflon tainted the water.

Like Cuomo, Brockovich expects more cases. But unlike the governor, who is serving his second term and reportedly has presidential ambitions, she isn’t concerned about overzealous safety standards when it comes to water.

She said she has already put together a list, which she intends to publish, of about 100 different towns where PFOA has contaminated the water.

“Hoosick Falls is now going to be representative of countless communities across the country,” she said. “We think so many of these issues in other places have other undertones, therefore we think it isn’t us. But I’m here to tell you, it is you. It is Hoosick Falls.”

To address the problem, Brockovich suggested what seems nearly impossible amid the partisanship that rancors Washington. She wants the country’s water crisis to become a policy issue without becoming political.

“Politicians should not play a game at all in our water supply,” she said. “It’s everyone’s problem. And, boy howdy, if there were one issue that everyone would be able to extend their hands across the aisle and say ‘we can fix this,’ I’d venture to say, for millions of people in countless communities, we absolutely agree it’s water.”

That seems increasingly unlikely. On Monday, Rep. Jason Chaffetz (R-Utah), chair of the House oversight committee, said the EPA was guilty of “flat-out incompetence,” and suggested the already embattled agency be dismantled rather than reformed.

“This is your water and my water,” Brockovich said. “This is my grandchildren’s water and my children’s water. We can’t adapt to drinking polluted water.”

Here’s A Sign That The Coal Industry May Be In Trouble

This week brings us yet another indicator that coal may be on the decline worldwide.

JPMorgan Chase announced on March 4 that it will curtail the amount of coal projects it finances worldwide. The bank joins several competitors, including Citigroup, Morgan Stanley, Wells Fargo and Goldman Sachs, which have all distanced themselves in some way from coal financing.

Environmental activists had a positive, if muted, response to the news. 

JPMorgan's new "environmental and social policy framework" outright bans the bank from financing new coal-fired power plants in high-income countries, as defined by the Organization for Economic Co-operation and Development, a Paris-based think tank. Only 32 countries, including the U.S., Japan, Australia and most of Europe, qualify as high-income according to the OECD.

JPMorgan will continue to finance coal-fired power plants in developing countries like China, India and Indonesia, but only if the plants use the most efficient technology available to burn its coal. 

In addition, the new framework also prohibits the bank from financing completely new mines in rich or poor countries around the world. 

JPMorgan will also reduce the amount of credit it extends to coal mining companies, although the policy doesn't have many details. The company declined to comment. 

The Rainforest Action Network, which calls on banks to completely end the financing of coal-based projects, called JPMorgan's move "a step in the right direction of moving away from some of the dirtiest carbon-based fuels." However, the group noted that the bank hasn't completely stopped financing coal projects.

"It’s important that the institution continue to address this issue by ending its support for coal [completely]," Ben Collins, a senior campaigner at the Network, told The Huffington Post.

In the last decade, JPMorgan has been one of the largest lenders to coal companies globally, providing $18.8 billion in funding for mining and coal-fueled power plants around the world, according to to a 2015 study on coal financing.

But the market for coal has fallen off a cliff in the United States over the last decade, thanks to the rise of cheap natural gas, with many of the country's biggest coal companies filing for bankruptcy protection over the last two years. 

Even in China, which is the world's largest coal consumer, demand has fallen off. That's partly because its economic growth has cooled, but partly because the country knows it has a smog problem and has vowed to get its emissions in line by having at least 20 percent of its energy from non-fossil fuel sources by 2030.

4 Things You Need To Know About The Latest Jobs Report

The monthly jobs report came out on Friday, and things are pretty good overall.

The big headline numbers were great: The economy added 242,000 jobs in February, much higher than the 195,000 that economists estimated, and the unemployment rate remained at 4.9 percent, which is nice and low. 

But if you drill down into the data, the picture is a little murkier.

Here are four things we know about the economy from the details in this report:

1) Wages aren't growing much, and it's hard to say why.

Average hourly earnings were down by 3 cents in February, to $25.35. Year-over-year, wages are up about 2.2 percent. That's not great -- although, thanks to very low oil prices and low inflation, it's not terrible either. But it's worth asking why wage growth since 2010 hasn't been as robust as growth in previous recoveries. 

Shane Ferro/Huffington Post

2) Nonetheless, people are coming back into the labor force.

As we said earlier, the economy added 242,000 jobs this month. But perhaps more importantly, details in the household survey show that more than 500,000 entered the labor force by starting to look for work again. In order to be officially unemployed, a person must not have a job and must be looking for work. Discouraged workers, who have given up looking for jobs, aren't counted as part of the labor force. It's a sign of a healthy economy when those people start looking for jobs again, even if they don't find work immediately.

3) But the unemployment rate for blacks is twice the unemployment rate for whites.

The unemployment rate for whites in the United States is 4.3 percent. For blacks, it's 8.8 percent. This is an economic dynamic that has been persistent since the Labor Department started tracking unemployment by race back in the 1970s. The chart below is not really America's best look: 

Shane Ferro/Huffington Post

There's a huge racial disparity in the unemployment rate in this country.

4) There is a lot of growth in low-wage industries.

The retail industry added 55,000 jobs last month, and food service added 40,000. These have been some of the strongest growth industries over the last few years, which means the economy is adding a lot of low wage, service sector jobs. That said, the economy also added a lot of health care (38,000) and construction (19,000) jobs in February, which tend to pay quite well. 

How Americans Get Duped Into Buying Endangered Animal Items

You might be contributing to the decimation of endangered animal species without even realizing it. 

When illegal ivory, tiger pelts or rhino tusks make their way to markets and e-commerce sites, traffickers may try to conceal how the products were obtained. They'll use terms like "bone" or "walrus tusk" to describe ivory, duping retailers and customers alike. What's more, uninformed shoppers or tourists might not know that tortoiseshell and certain types of coral or wood are also part of this illicit trade network, which is estimated to be worth between $50 and $150 billion per year. 

Major companies across the e-commerce, retail and travel industries are now banding together to raise awareness and reduce the amount of illegal wildlife products Americans buy. 

Google, eBay, Etsy, JetBlue and Tiffany & Co are among the 16 firms committing to eliminating these products from their supply chains, the U.S. Wildlife Trafficking Alliance and the Obama administration announced Thursday.

“A lot of Americans are just not aware that they could be buying illegal products and adding to this global problem,” David J. Hayes, chair of the alliance and former chief operating officer at the Department of Interior, told The Huffington Post.

Each company will take action within its own sphere of commerce. Some will warn customers about the impacts of illegal wildlife products, while others will flag items on sale that potentially violate wildlife policies or provide educational videos on sustainability for travelers.

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Illegal ivory and ivory products confiscated in China. 

Several online retailers have already taken steps to block harmful items from their sites. eBay and the online bidding platform LiveAuctioneers.com have banned illegal ivory sales. Etsy has banned all ivory and prohibited sellers to list goods made from threatened or endangered animal parts. 

"It's hard for the consumer to know what's legal and what's illegal, and it can be hard for the retailer to know," said Beth Allgood, U.S. campaigns director for the International Fund for Animal Welfare, a conservation nonprofit that has worked with eBay, Etsy and LiveAuctioneers to remove illegal ivory listings. "We can be partners to retailers who don't know all the regulations."

For JetBlue, the awareness campaign will primarily inform passengers traveling to and from the Caribbean and Latin America, said Sophia Mendelsohn, JetBlue’s head of sustainability. In videos to be shown on JetBlue’s flights, residents and small business owners from the region will speak about how sustainable tourism practices can support wildlife diversity.

“We want to stop this issue at its root cause,” Mendelsohn told HuffPost. “We’re going to cut out unwitting demand so there’s less profit in drawing out these natural resources, whether it’s for tech, necklaces or special meals” at local restaurants.

Lam Yik Fei via Getty Images

Leopard skins seized by Hong Kong customs officials.

Other corporate partners that have pledged to work with the alliance include Ralph Lauren and Royal Caribbean Cruises. The Association of Zoos and Aquariums will exhibit seized illegal wildlife products in its parks to highlight the threats posed to various species. Discovery Communications will produce virtual reality content focusing on trafficking and conservation. 

The household brands committed to this new effort will work to establish best practices for smaller names in the travel, e-commerce and retail industries.

“These companies are accepting industry leadership and making sure smaller ones aren’t involved in wildlife trafficking,” Hayes said. “These are true industry-wide efforts.”

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An illegal haul of rhino horn.

Awareness of wildlife conservation has been growing for some time. President Barack Obama issued an executive order to implement a wildlife taskforce in 2013. The corporate alliance announced this week is a result of that effort.

Public interest in the issue spiked last year following the killing of Cecil the Lion. The backlash against the Minnesota dentist who shot down the lion in Zimbabwe heightened scrutiny of trophy killings and spurred action from the travel industry.

American Airlines, United Airlines and Delta Airlines announced last summer that they would ban transport from Africa of the “big five” game animals -- lion, elephant, rhino, leopard and buffalo.

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A lion in an enclosure of the Lion Park, in Johannesburg, South Africa.

This Could Explain One Of The Biggest Mysteries Of Cheap Oil

The price of oil has crashed over the last year and a half. In the middle of 2014, a barrel of crude cost over $100. Now it's worth just over $30.

Normally, such a collapse would lead OPEC to pump less oil. The idea is that less oil on the market helps keep prices up. But despite a historic fall in oil prices, the Saudi Arabian-led international oil cartel hasn't budged: The biggest step it has taken so far is offer to freeze production at its current record levels. Production cuts are not on the table.

The big question is, why? One theory is that OPEC simply has less control over the oil market than it used to, thanks to the shale gas revolution. Another possibility is that OPEC wants oil prices to be low precisely in order to drive shale oil producers, which have higher costs, out of business. 

Here's a simpler hypothesis: Maybe the Saudis aren't cutting production in the face of low prices because huge portions of their oil reserves might eventually become worthless. That's what James Rowe, an environmental studies professor at the University of Victoria, thinks. 

If that happens, today's oil prices won't look low -- not when there's an overabundance of an asset that can't be sold. But oil prices are the lowest they've been in 12 years, you say. How could they ever be considered high? 

This explanation relies on two related ideas: a carbon bubble and stranded assets. The carbon bubble refers to the fact that energy companies around the world are sitting on five times more fossil fuels than can be burned, the research nonprofit Carbon Tracker estimates. Those assets, worth about $2 trillion, are referred to as "stranded assets."

So what does that mean for an oil company that controls a state? It might as well sell as much oil as possible while still can.

Saudis can't sell oil for $100 a barrel, obviously, but Rowe said they "appear to be positioning themselves for the next best option: gobbling up as much of the earth’s remaining carbon budget for themselves before the bubble bursts. Isn’t it better to sell at a lower price than to receive nothing at all from vast unburnable reserves?"

By the time the world has moved on from oil, Rowe said, Saudi Arabia "will have sold what it could while its reserves were still burnable."

And the country will have moved on as well. Its oil minister, Ali Al-Naimi, has said Saudi Arabia will be a solar exporter by the middle of this century. 

Warren Buffett Is Wrong About Climate Change

Warren Buffett doesn't want you to know how his empire is preparing to deal with the disastrous effects of climate change. In fact, he said in a letter released Saturday, he isn't exactly sure this whole "climate change" thing is real, anyway.

In his annual letter to investors in his conglomerate Berkshire Hathaway, the billionaire investor fought back against a proposed shareholder resolution demanding his insurance subsidiaries measure and disclose the risks that climate change poses to their business and how the company is responding to the threat. Buffett compared fears over climate change to the brouhaha around apocalyptic Y2K predictions.

“It seems highly likely to me that climate change poses a major problem for the planet,” the 85-year-old wrote in the letter, released Saturday morning. “I say ‘highly likely’ rather than ‘certain’ because I have no scientific aptitude and remember well the dire predictions of most ‘experts’ about Y2K.”

Insurance companies take on losses after major weather disasters (think droughts, Hurricane Katrina and other big storms), so it makes sense they'd be concerned about climate change. If that's true, why would Buffett say he's not so sure this is real? Because skepticism is better business.

Buffett isn’t denying climate change, but rather using language climate deniers feel comfortable with and will likely cite in future attempts to derail environmental policy. Climate change affects Buffett's business: He owns a Nevada utility that has fought and won against solar development in that state, and his railroad, Burlington Northern, in large part depends on the demand for coal and oil.

Buffett argues in favor of seeing climate change as a likely risk to the world, but against the need for more oversight, transparency or regulation of his companies. It’s a position he’s taken before -- Buffett argued against designating reinsurers, of which he owns the world’s fifth-largest, as too-big-to-fail institutions. Though he said he never spoke directly to regulators about the issue, he made his views public. Regulators, thus far, have agreed.

Why Buffett's Words Matter

Markets, governments and companies aren’t properly pricing the risk of climate change. For instance, are beachfront homes in low-lying areas as valuable as their owners believe? Experts reckon that only once markets and others attach a price to the threat of climate change will the rest of the world finally move to limit the potential consequences. If insurers -- which must grow their assets in order to make good on their guarantees -- measure the potential losses they could incur as a result of climate change, they can then price that risk. Then everyone else could follow.

Buffett's views against disclosure put him in sharp disagreement with Bank of England Governor Mark Carney, who has said that financial markets can help limit the effects of climate change, but only if companies -- such as insurers -- supply the kind of information that Buffett doesn't want to disclose. 

In September remarks to the insurance industry, the chief overseer of the world’s third-largest insurance sector warned about the numerous economic and financial risks posed by climate change. Carney urged companies, particularly insurers, to start taking seriously their responsibility to measure their potential losses. Their own solvency could be at stake, Carney warned.

Insurance companies invest their money in places like the stock market. But “stranded" oil, gas and coal reserves, left in the ground due to the world’s commitment to halt rising temperatures, could render related financial assets worthless. Or the disruption of trade resulting from an extreme weather event could affect related investments.

Cynthia McHale, director of the insurance program for Ceres, a nonprofit group that pushes investors to pay attention to the financial risks of climate change, said in an interview earlier this month that neither insurers nor their government overseers have a good handle on the risks that climate change poses to insurers’ various financial assets.

McHale compared the situation to the one faced by big banks in 2008, when few sufficiently realized the magnitude of potential losses from the U.S. property bust. 

Weathering Heights

Buffett's case against the resolution boils down to this: “Thinking only as a shareholder of a major insurer, climate change should not be on your list of worries.”

First, he said, his company can handle any possible losses thanks to rising premiums. Because insurance policies are typically written for one year and repriced annually, Buffett's company can hike premiums to better account for the heightened risk of climate change-driven losses.

Second, Buffett asserts that climate change has produced neither “more frequent nor more costly hurricanes nor other weather-related events covered by insurance.”

But eight of the 10 costliest hurricanes in U.S. history, in terms of insured losses, have occurred since 2000, according to the Insurance Information Institute. Nine of the 10 costliest floods in U.S. history, when measured by payouts from the federal government’s National Flood Insurance Program, also have occurred since 2000, according to the insurance group.

NOAA

The U.S. experienced five different types of extreme weather last year. 

Munich Re, the world’s biggest reinsurer, estimated that extreme weather events led to $510 billion in insured losses from 1980 to 2011.

Carney said that according to Lloyd’s of London, the world’s oldest insurance market, the roughly 8-inch rise in sea level at the tip of Manhattan since the 1950s increased the insured losses from Hurricane Sandy by 30 percent in New York alone.

PAUL J. RICHARDS via Getty Images

A house in Staten Island, New York, hit in Hurricane Sandy. Scientists say we should prepare for more weather events like the massive storm.

Insurance companies should care about climate change from a selfish perspective if they want to stay in business. Carney has warned that insurers that jack up premiums or exit markets after realizing the potential losses associated with climate change could unwittingly cause the value of their own assets to shrink.

He also warned about potential losses from claims on policies written by insurers. For example, insurance companies could be forced to make massive payouts if victims of climate change successfully hold accountable companies that contributed to it. He likened the situation to the one faced by U.S. insurers stung by tens of billions of dollars in losses from asbestos claims.

In fact, Carney said that as a result of recent weather trends, some now estimate that insurers are undervaluing their potential losses by as much as 50 percent.

Insurance companies caught unprepared for the effects of climate change could cause problems for government officials and put taxpayers at risk.

For example, governments may have to cover markets that insurers dump as a direct result of climate change, the Bank of England chief said, putting taxpayers on the hook.

Bloomberg via Getty Images

Mark Carney, the U.K.'s top central banker, says insurers may be undervaluing their potential risks by 50 percent. 

What Could Change If Insurers Opened Up About This Risk

Disclosing climate change information would improve policymaking, Carney said. It could make climate policy more like monetary policy, where officials who set interest rates often tinker with their stance based on markets’ reactions.

The Financial Stability Board, a global group of the world’s financial regulators, wants financial companies to disclose their risks, too.

Some state insurance regulators in the U.S. are demanding insurers take the threat posed by climate change into account when investing their customers’ money and underwriting insurance policies. Washington state’s insurance regulator, Mike Kreidler, has criticized some insurers for failing to take climate change risks seriously, arguing their own solvency was at risk.

Buffett sounded more alarmed by the prospect of climate change in 2007, when scientific evidence of the impacts of climate change was less well-understood. In his annual letter that year, Buffett wondered aloud whether the deadly and expensive hurricanes of 2004 and 2005 marked the first warning of a new type of climate.

“It would be a huge mistake to bet that evolving atmospheric changes are benign in their implications for insurers,” Buffett wrote in his letter.

He warned that it was “naïve” to think of Hurricane Katrina -- the costliest hurricane in U.S. history -- “as anything close to a worst-case event.”

“These could rock the insurance industry,” Buffett added.